{
  "title": "Optimal Monetary Policy with Overlapping Generations of Policymakers",
  "publication": "IMF Working Papers, February 1, 2010",
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  "summary": "In this paper I study the effect of imperfect central bank commitment on inflationary outcomes. I present a model in which the monetary authority is a committee that consists of members who serve overlapping, finite terms.",
  "sections": [
    {
      "heading": "Research question and model setup",
      "content": "- Studies the effect of imperfect central bank commitment on inflationary outcomes.\n- Monetary authority modeled as a committee (Monetary Policy Committee, MPC) composed of members who serve overlapping, finite terms.\n- Older and younger generations of MPC members decide on policy via a bargaining process.\n- Model generates a continuous measure of the degree of the monetary authority's commitment."
    },
    {
      "heading": "Key findings",
      "content": "- The model implies that the degree of commitment depends on committee composition dynamics (churning rate and tenure).\n- Lower churning rate or longer tenure time makes social welfare closer to that under optimal commitment policy.\n- Bargaining between older and younger MPC members alters inflationary outcomes relative to full commitment or pure discretion."
    },
    {
      "heading": "Policy implications and interpretations",
      "content": "- Policies that reduce member turnover (lower churning rate) or extend member tenure can improve welfare by approximating optimal commitment.\n- Institutional design of MPCs (tenure length, reappointment/turnover rules) matters for inflation-output trade-offs and loss function outcomes.\n- Consideration of intergenerational bargaining dynamics is important when assessing imperfect commitment environments."
    },
    {
      "heading": "Technical scope and keywords",
      "content": "- Subject: Inflation, Output gap, Prices, Production, Technology\n- Keywords: Commitment, cost-push shock, Discretion, efficient frontier, Inflation, inflation-output gap trade-off, loss function, member tenure, members result, monetary policy, Monetary Policy Committee, MPC member, objective function, Optimal Monetary Policy, Output gap, output gap volatility, standard deviation, WP\n\n---\n\n Content in this bundle\n\n- wp1032\n  - wp1032 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1032 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/optimal-monetary-policy-with-overlapping-generations-of-policymakers-23614"
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    "Authors: Maral Shamloo",
    "Published: February 1, 2010",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451962642.001",
    "Studies the effect of imperfect central bank commitment on inflationary outcomes.",
    "Monetary authority modeled as a committee (Monetary Policy Committee, MPC) composed of members who serve overlapping, finite terms.",
    "Older and younger generations of MPC members decide on policy via a bargaining process.",
    "Model generates a continuous measure of the degree of the monetary authority's commitment.",
    "The model implies that the degree of commitment depends on committee composition dynamics (churning rate and tenure).",
    "Lower churning rate or longer tenure time makes social welfare closer to that under optimal commitment policy.",
    "Bargaining between older and younger MPC members alters inflationary outcomes relative to full commitment or pure discretion.",
    "Policies that reduce member turnover (lower churning rate) or extend member tenure can improve welfare by approximating optimal commitment.",
    "Institutional design of MPCs (tenure length, reappointment/turnover rules) matters for inflation-output trade-offs and loss function outcomes.",
    "Consideration of intergenerational bargaining dynamics is important when assessing imperfect commitment environments.",
    "Subject: Inflation, Output gap, Prices, Production, Technology",
    "Keywords: Commitment, cost-push shock, Discretion, efficient frontier, Inflation, inflation-output gap trade-off, loss function, member tenure, members result, monetary policy, Monetary Policy Committee, MPC member, objective function, Optimal Monetary Policy, Output gap, output gap volatility, standard deviation, WP",
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